USD/CAD is almost unchanged in the Monday session. In North American trade, the pair is trading at the 1.3460. On the release front, it’s a very quiet start to the week. There are no Canadian releases until Thursday. In the US, there is one minor event on the schedule. On Tuesday, the US releases PPI, with the index expected to slip to 0.1%.
Canada’s economy continues to create jobs at an impressive clip, as the Canadian economy continues to expand thanks to the strong recovery south of the border. On Friday, Employment Change came in at 15.3 thousand. This was lower than the previous two readings, but easily beat the forecast of 0.6 thousand. The economy has created jobs for seven straight months, as the labor market continues to recover. The unemployment rate also improved, dropping from 6.8% to 6.6%. Still, these figures only tell part of the story. Wage growth remains soft, and many of the recent job gains have been part-time positions. The Canadian dollar posted only modest gains on Friday, as upward movement was limited by a very strong Nonfarm Payrolls report in the US.
The US economy continues to steam ahead at full speed, buoyed by a red-hot labor market. On Friday, Nonfarm Payrolls sparkled with a gain of 235 thousand. This easily beat the estimate of 196 thousand. The strong release makes it a virtual certainty that the Fed will raise rates by a quarter-point on Wednesday. Although a rate hike has been priced in by the markets, there have been disappointments in the past, so a rate move will likely give the dollar a boost against its major rivals, such as the euro. The solid job numbers also give President Trump a much-needed boost. Trump is under pressure to present an economic agenda, but the markets won’t mind giving him some additional breathing room with the economy performing well.
